Is the renewable energy target for India within reach?

Almost 400 million Indians—about a third of the subcontinent’s population—don’t have access to electricity. This power deficit, which includes about 100,000 un-electrified villages, places India’s per capita electricity consumption at just 639 kWh—among the world’s lowest rates.

The access gap is complicated by another problem: more than three-quarters of India’s electricity is produced by burning coal and natural gas. With India’s rapidly-growing population— currently 1.1 billion—along with its strong economic growth in recent years, its carbon emissions were over 1.6 billion tons in 2007, among the world’s highest.

This is unsustainable, not only from a climate change standpoint, but also because India’s coal reserves are projected to run out in four decades. India already imports about 10% of its coal for electricity generation, and this is expected to reach 16% this year.

India’s national and state governments are taking action to correct this vicious circle of power deficits and mounting carbon emissions. The national government has set a target of increasing renewable energy generation by 40 gigawatts (GW) by 2022, up from current capacity of 15 GW, itself a threefold increase since 2005. Still, renewable sources account for just 3.5% of India’s energy generation at present, so the scale of the challenge is formidable. The cost of meeting it will be high unless the tremendous innovative capacity of India and market reforms can be coordinated to make India a clean energy leader.

This is where subsidies come in. In an earlier blog post, I wrote in support of the Pittsburgh G20 Summit resolution, supported by World Bank analysis, to end fossil fuel subsidies; But subsidies can be used to incentivize the development of renewable energy generation. Along with phasing out the wrong incentives, India’s challenge shows the urgency of bringing in the right incentives to make the shift to renewable energy.

An excellent new study, Unleashing the Potential of Renewable Energy in India, produced by a World Bank team led by my colleague Gevorg Sargsyan, and supported by the Energy Sector Management Assistance Program (ESMAP), estimates that achieving the Indian government’s renewable energy goals for the next decade will cost $10 - $64 billion in subsidies. The lower-cost scenario is based on developing low-diversity, low-cost renewable energy sources, while the higher-cost estimate is based on a renewable energy mix that is high-diversity, including high-cost sources like solar. Spread over 10 years, the low-cost option is within reach. And if fossil fuel prices continue to rise—free of distorting subsidies— the higher-cost scenarios grow more viable.

But power generation is just part of the challenge involved in exploiting India’s estimated 150 GW of renewable energy potential; the other challenge is transmission and distribution of the power to far flung areas of the country. A $1-billion World Bank loan approved in 2009 is helping to turn this around. It supports implementation of a plan by India’s national power transmission utility, Powergrid Corporation, to strengthen five transmission systems in the northern, western and southern regions of the country. This will enable transfer of power from energy surplus regions to towns and villages in under-served regions of the country. It will also increase the integration of national grid, resulting in a more reliable system and reduced transmission losses.

By 2050, some estimates put India’s power generation requirements at one terawatt, or one trillion watts. This would be a six-fold increase in India’s current installed power capacity. It is a big challenge. But it is a big opportunity too, for Indian companies, for the creation of Indian jobs, for greater Indian prosperity. Because most of India’s power plants have yet to be built, India has options that many countries can only dream of. Instead of being locked into following a high-carbon energy track, India can lead the way to a lower-carbon, renewable energy path.

India is already home to Suzlon, the third leading wind energy installer worldwide, with almost 10% of the total global market. Other innovative companies in solar energy, biomass energy production, and energy efficiency are growing in India’s vibrant entrepreneurial sector. In addition, India’s waterways offer abundant small hydropower potential that remains untapped because the transmission and distribution capacity is inadequate.

Comments

Mr. Daniel,
Good insights about the power situation in India. Not only for India, Power crisis is a major challenge to combat climate change. Is the world bank receptive to innovative technologies which can meet demands of sustainability? Capital costs, lowest power costs, flexibility of sites, base and peak load options, retro fitting existing heat based power plants for minimum conversion costs etc are critically important. The world Bank's contribution to climate change mitigation depends on strict discretion on clean technology options. I would suggest the world bank includes a suggestion box from potential technology inventors, which can be nurtured in all aspects, right form Intellectual Property Protection support for the benefit of the planet. How about introducing such open windows in the world bank's operation systems, so that any one can contribute to the right cause of sustainable development, instead of world bank and countries interacting?

Dear Dan,
I found your Post very interessting since India is a economy that is growing incredibly fast and many crucial desitions for the futhure need to be taken now.
You talked about 2 scenarios, one low cost and the high cost.
In the first one besides de low-diversity dont you think the energy efficiency is a important factor?
By one hand they have a very low energy consumption but the figure of 1/3 of the population without electricity acces is alarming. The energy being used is wasted in inefficient appliances, in the electricity and fossil fuels cases.
My other question is your opinion of developing a off grid market rather than increase the grid, since there are many small villages isolated. Can this be done, or would only repesent a more expensive solution?
The storage for this small systems may be a problem.
What is your oppinion?
Thanks

Appreciate your Views and deep knowledge on the energy needs of india. I wish to add few points in this Issue. The Energy requirement in future is going to decide the Economic fate of any country in the future. If a See this Big Picture in Indian Perspective we are struggling with Efficient Utilization of the current Electricity generated by the country. I read in some newspaper recently the official figures of the Line Losses in some parts of National Capital is 50% which is really very very high. Being National Capital if this is the situation you can imagine about rest parts of India. If we are able to conserve 20% energy it can solve 50% problems of Elecricity crisis. If In India the government give Enough Support In terms of Loans, PPP and FDI in Solar Plants, Bio Gas plants and Wind Mills they can fulfill the complete future requirements of India all alone with surplus energy to spare.